To settle a tort claim that Kruger had filed against the city last year, the city agreed to pay Kruger $5,000 and to erase two disciplinary actions he faced: an 80-hour suspension without pay in 2010 for his public tribute to five Nazi-era German soldiers at a city park and a 2014 written reprimand for retaliating against a female lieutenant.

The city also agreed to give Kruger an additional 80 hours of vacation time, and have the chief write him a complimentary letter about Kruger's police work and service to the community.

"It's outrageous,'' Novick said of the city's agreement to dismiss Kruger's discipline.

He said the soldiers that Kruger memorialized on a tree at Rocky Butte were part of the military arm of the Nazi party. He called the removal of the discipline "an insult to anyone of Jewish or Russian or Polish descent.''

"The irony of the fact that we heard of this the week after Chief Reese completed a diversity training does not escape me,'' Novick said.

Novick called it "particularly offensive'' that the city agreed to pay Kruger back for the lost pay from his suspension in 2010.

"It suggests that in retrospect, the city doesn't think he deserved any punishment at all,'' Novick said.

Mayor Charlie Hales, who signed off on the settlement agreement on June 16, released this statement late Wednesday:

"I'm not defending actions from 15 years ago. And I'm not addressing the details of the negotiated settlement. But removing disciplinary documents from police files doesn't change the facts, especially in a well-known story like this one. Since I arrived, we have improved police discipline rules to make them timely, consistent and predictable. There's still more work to be done. We are moving the bureau forward."

Because of a conflict of interest, the city hired outside counsel, Kari Furnanz of the law firm Hart Wagner, to negotiate the settlement. Furnanz recently left the firm and serves as an administrative law judge for Oregon's Bureau of Labor and Industries, according to the state bar directory.